When Is It Too Early To Tender?

Saplings Taking Root
I love the buzz of young businesses. They have the energy and drive to grow but there is one obstacle - Perception. For some reason, bigger businesses and public bodies regard young business as a risk. Ok, we know fledglings can be fragile, but not if they are structurally sound. Why would a 14 month old company set up properly with growing order books be any more risky than an older one?

I often get asked by young companies when they should start looking at tendering, as they are all too aware of this problem. The answer, surprisingly, isn't simple. It depends on a number of factors.

Area of Expertise
I don't want to make this sound like 'They need you more than you need them', but if you come from an area where there are few of you about, the client will always welcome your involvement. More especially if you're at the quality end of the spectrum. Quality products or services will give them confidence, you should play on that. Put yourself in their shoes, if you're splashing a load of money out on a project and you're risking it on a new supplier, you'd at least expect to hedge your bets with a company pushing high quality, or you stand a risk of ending up with egg all over your face!

Trophy Clients
Clients love a good story. They also love to buy into a concept. If you're a cleaning company with a couple of premier league footballers on your books, you'll have an excellent start at building new clients! In tendering, they will make certain assumptions about you based on those clients. The same goes for having a contract like Subway or Argos, it'll earn Kudos.

Risk Profile
As a matter of illustration only, I'm going to demonstrate by exploring the following. Picture two scenes: The first is a Boiler Servicing contract. If the contractor goes bust, it could have some huge ramifications. There may be a portfolio of properties that might not get serviced in time, or the effort of retendering is significant. Let's not forget the risk its putting on the residents or building users. The client then has to pay inflated costs until they can retender, which can take months. This genuinely keeps clients awake at night.

Now let's take the second scenario. The client has a Quality Consultant on their books, and the contract goes 'bang'. As you can imagine, there won't be a lot of teeth-gnashing over that one! (A HUGE apology to all Quality Consultants out there! Nothing personal!) Get my point? So it's actually worth taking a risk on some services.

Threshold to Establishment
Generally, two years is considered a 'suitable timescale' when a business can call itself established. No doubt there will be more tooth-gnashing at this statement than my last paragraph. Traditionalists will tell you three, though. From personal experience, most tenders want 2 years of accounts. Tip: Draft or projected accounts can help. Use them!

Use your Experience
'Hang on! I don't have experience on winning tenders!' I hear you growl. No, not until you tender you don't! Give it your best shot and get some feedback. Find out if the client likes you or sees you as a risk. Get them to tell you the areas that they were concerned about, you need to see it with their eyes! Only then will you be in a better place to discover how you compare against your peers.

Good Luck, and don't be put off by the nay-seers!

Robert is a Director of Harris Associates, and has evaluated tenders from the client side. He is now a company owner helping businesses win tenders. He is available for free advice on 0800 254 5000.